So you can get your over-indebtedness under control!
No matter what money problems you should have. Whether you should be in a personal bankruptcy, or your credit limit was completely exhausted and you should also have a negative credit bureau entry! More of this story: abcbizhelp.com
It’s time to clean up your over-indebtedness and make a proper financial recovery!
In the hamster wheel of debt – recognize the problem of over-indebtedness
When is one overindebted? How do you recognize that? We would like to shed more light on this issue in this section.
Simply put, one is over-indebted if one has more expenses than revenue. This fact can lead to the fact that one can always fall into the debt traps, without noticing this directly, unless one keeps his account always in the overview.
In the worst case, this can lead to personal bankruptcy and insolvency. The most common cause of over-indebtedness is consumer spending, which is financed by a loan. These include the financed TV, the financed car, but also a financed house, which one can afford only with difficulty and thus also can become a debt trap.
But how can it happen that someone gets into consumer bankruptcy?
Here is a simple example. Suppose that somebody has to finance a car so that he can get to work and secure his income. This vehicle is broken but after the warranty period.
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Over-indebtedness does not have to be
However, the vehicle still has to be paid off. Thus, the borrower can not, as usual, drive to work. Unless another way to work is available, he will lose the job, which reduces his income. As a result, he has less income and must continue to serve the financing.
Another example is that a borrower has financed his house with the bank. After the agreed 10 years, the fixed interest rate expires. In the meantime, interest rates have risen and thus the loan rate is adjusted. As a result, the credit rate is higher, which can lead to financial problems even with tight costing.
As we can see from these two examples, anyone can come into such a situation. Different situations can trigger over-indebtedness and, as a result, become insolvency grounds.
This can be due to the loss of one’s own workforce, but also due to job loss. Even the careless handling of money can help to increase money problems. But how do you find out exactly if you are over-indebted?
First, you should sort the account movements of the last 12 months. These should be divided into “vital fixed costs”, “fixed costs to finance consumer goods” and other categories, such as “food and drink”, “leisure” and other, matching generic terms.
Through this division, one can get a precise overview of how to get into this situation. This is the first step on the way to debt freedom.
What to do with debts? – Getting out of debt!
The first step is the analysis. You should categorize and classify any account movement that has been made in the last 12 months. After that you get a monthly overview.
The cost of last year should be divided by 12 to get the monthly cost. Opposite that stands the income. Then you should look at the costs more closely and analyze which costs are unnecessary or too high.
First you should reduce the unnecessary costs as possible to 0. This is easiest if you decide to keep a household book. This can be done in digital form, via app or with pen and paper.
However, it is especially important that you really enter each issue to get a clear overview at the end of the month. To prefer is the solution via App, as this is always in your pocket and you can make the categorization immediately.
To reduce the monthly fixed costs, you should also look at his insurance and premium payments and compare with other providers. Often there is great savings potential, with the same insurance protection.
Furthermore, the meaningfulness of the insurance should be checked. The next step is the tariff or insurer change, with the necessary insurance, where against unnecessary insurance should be terminated.
These steps should drastically reduce the monthly fixed costs. But it goes further, because you are already in debt. Therefore, the question arises: “What is now over-indebted?”.
In order to get out of over-indebtedness easier, it is recommended to check every loan. A good help with debt, can be a so-called debt restructuring. This means that the current loans are replaced by loans that have better conditions, such as lower interest rates or a longer term.
As a result, debt repayment may take longer, but is easier to accomplish as monthly installments are lower. These measures help with over-indebtedness again to get along with their own money.
If these measures do not help, however, we recommend a professional debt counseling service, which looks at their personal situation very closely and is available to help and advice and helps in the debt restructuring and advises to not again or worse to borrow.
A long-term financial recovery is usually the measure of all things.
This can be a good help in over-indebtedness and often also gives courage to tackle this problem of over-indebtedness. In a personal conversation with such a debt counselor, however, you should be honest with the counselor and be honest with yourself and know the facts and figures, so that this advice can be of real help.
Personally, I offer help with money problems with the goal to carry out a complete financial recovery.
Many people shy away from debt advice, as they are usually very embarrassing and uncomfortable with these debts.
There are a number of issues that need to be worked through during a financial recovery.
Among other things, one sits down with the various financial institutions and negotiates better conditions for the client, or seeks better financing options that cost the client less.
In addition, a consultation also serves as a training. A coach who is careful to reach his goal. For a coach, of course, this sporty nature, but in this case, of course, to be helped out of over-indebtedness. Such a consultant accompanies the debtor on his way and helps in the event of insolvency proceedings in the discharge of residual debt.
Out of over-indebtedness – but how effective are these ways?
Many need help with debt, but is this help really effective? Of course, this depends on the individual case, because the consequence and perseverance of the debtor plays a major role. Another important factor is the level of over-indebtedness.
However, the principle behind the way out of over-indebtedness is always the same and very simple. The principle is to reduce costs so that you can get out of over-indebtedness after some time.
In addition to reducing their own spending, increasing revenue is also a way to get out of over-indebtedness.
The most effective way is to increase your income by, for example, selling all the unnecessary stuff and looking for a side job and reducing your own expenses. This has the advantage that it is easier to raise the discipline to get out of the over-indebtedness, as this is not so tightly calculated and after the repayment of monthly repayments still enough life should be available.
Another tip is to save money in addition to the repayment. This is very effective from a mental point of view, as there is a financial buffer in addition to the reduction of the debt. If all this can not be done by itself, we recommend professional help, which helps with the way to freedom of debt with words and deeds.
There are special advisers who take care of the financial situation of the debtor and support them through bank talks and other services. This is the most effective alternative, because besides the tips mentioned above, there is someone who is accountable and who keeps a close eye on expenses in order to tackle the problem together with the debtor.
However, the most effective way against over-indebtedness is not to get into this predicament. There are also tips for that. These tips are for example the two accounts system, where you always transfer money to a separate account at the beginning of the month and thus save money.
This amount can be used to cover larger, unpredictable costs, so that you no longer get into a shortage of money, in which you must take loans for consumer goods.
To summarize, the way out of over-indebtedness is very difficult for many, and depending on the size of the amount, the path to debt freedom can be a little longer, but you should be patient as this can be worthwhile for everyone.
Regardless of whether one comes from this situation through support, or on one’s own, one should be proud of oneself and actively choose to follow this path. Once you’ve mastered this path, you can continue to benefit from the disciplined discipline, as you’ve learned to “save” more money with your income and by cutting costs. This can still be used to save money.